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The government needs to focus on financial education, according to the Liberal Democrats, rather than the establishment of the savings gateway plan.

Previously announced in this year's Budget, the savings gateway is aimed at about 8m individuals in receipt of qualifying benefits and tax credits, namely working tax credits, child tax credits paid at the maximum rate, income support, jobseeker's allowance, incapacity benefit and employment support allowance and severe disablement allowance.

However, Vince Cable, deputy leader of the Liberal Democrats, said many people were struggling to pay off debts and said the government should look more to overall financial education.

He said: "The creation of the savings gateway makes the need for better financial education and free financial advice even greater.

“There are currently millions of people on low incomes who would be better served by paying off their debts rather than saving."

Under proposals, the government will match every contribution pound for pound. The scheme set to open in 2010 with matched payments being paid out to savers from 2012.

Financial institutions such as building societies and banks will be permitted to offer and operate the gateway while HM Revenue & Customs will be given the necessary powers to pursue cases of fraud and maladministration as well as the ability to approve providers.

The government is currently consulting on how the scheme will operate, with the closing date for responses set for the 4 June.

These measures follow on from the Thoresen Review of Generic financial advice, published on 3 March, which outlined the blueprint for a national money guidance service aimed at providing people with the knowledge to make "sound" financial decisions with regards to pension planning and saving.